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Paul Krugman: Blue Dogs and Healthcare Reform

Nobel-prize winning economist Paul Krugman offered this exceptional column in the New York Times yesterday, calling out “Blue Dog” Democrats on their opposition to healthcare reform.

Krugman writes:

Reform, if it happens, will rest on four main pillars: regulation, mandates, subsidies and competition.

By regulation I mean the nationwide imposition of rules that would prevent insurance companies from denying coverage based on your medical history, or dropping your coverage when you get sick. This would stop insurers from gaming the system by covering only healthy people.

On the other side, individuals would also be prevented from gaming the system: Americans would be required to buy insurance even if theyâ€™re currently healthy, rather than signing up only when they need care. And all but the smallest businesses would be required either to provide their employees with insurance, or to pay fees that help cover the cost of subsidies â€” subsidies that would make insurance affordable for lower-income American families.

Finally, there would be a public option: a government-run insurance plan competing with private insurers, which would help hold down costs.

The subsidy portion of health reform would cost around a trillion dollars over the next decade. In all the plans currently on the table, this expense would be offset with a combination of cost savings elsewhere and additional taxes, so that there would be no overall effect on the federal deficit.

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There has been a lot of publicity about Blue Dog opposition to the public option, and rightly so: a plan without a public option to hold down insurance premiums would cost taxpayers more than a plan with such an option.

But Blue Dogs have also been complaining about the employer mandate, which is even more at odds with their supposed concern about spending. The Congressional Budget Office has already weighed in on this issue: without an employer mandate, health care reform would be undermined as many companies dropped their existing insurance plans, forcing workers to seek federal aid â€” and causing the cost of subsidies to balloon. It makes no sense at all to complain about the cost of subsidies and at the same time oppose an employer mandate.

So what do the Blue Dogs want?

Maybe theyâ€™re just being complete hypocrites. Itâ€™s worth remembering the history of one of the Blue Dog Coalitionâ€™s founders: former Representative Billy Tauzin of Louisiana. Mr. Tauzin switched to the Republicans soon after the groupâ€™s creation; eight years later he pushed through the 2003 Medicare Modernization Act, a deeply irresponsible bill that included huge giveaways to drug and insurance companies. And then he left Congress to become, yes, the lavishly paid president of PhRMA, the pharmaceutical industry lobby.